Apple Music Pays Industry Standard Subscription Revenue Fees to Record Labels

[Paradoxally]

I like how Taylor Swift refers to lyrics and music that other people wrote for her to perform as hers. They're the ones that deserve the credit, not her.

Sure, her recent album had collaborations with known producers, but I can assure you most of her content is self-written. Her entire third album (which many fans consider her best, myself included) was written by herself - no co-writers - and produced by herself and Nathan Chapman of Big Machine Records.

Please look up the songwriting credits of her discography before making these statements. They are public domain.

 

[SixtyK]

Taylor Swift famously pulled all of her music from Spotify last year, claiming that by offering music for free, Spotify was undervaluing her work.

Taylor Swift's crappy, predictable music was undervaluing her work but yeah... let's blame Spotify.

 

[netsped]

So, does this means that Apple is going to charge less than US$9.99 in latin america?

 

[LethalWolfe]

I would argue it has been a issue. Distribution costs significant amounts of money.

Setting up a storefront on your website (or using a third party like CDBaby) and sending people MP3s isn't that big of a technological hurdle. People have been crowing about artists self-distributing their work and the major labels vanishing since the late '90's. The big problem is money. Musicians need it, labels have it.

Recording costs have plummeted. Someone who is dedicated can produce, mix and master studio quality in their bedroom with a laptop and logic X. This isn't the 90's anymore where you need million dollar equipment and sound boards

Recording costs have dropped but whether or not someone is talented enough to do it all themselves (musician, producer, audio engineer, etc.,) and pull off the quality people have come to expect is a different story. Even then, you still have to worry about marketing costs and marketing is the make or break point. You can be god's gift to music but if only 100 people know you exist then you are still a broke musician working at Starbucks.

I do a lot of work in the indie film/new media world, not the music world, but a lot of the basic challenges are the same.

 

[hemanwomanhater]

No, that figure is the money it paid out to a "global superstar" apparently. That article states again that Spotify is operating at a loss.

That's wild that Spotify, the largest of these kinds of services, is not even profitable. Makes me think:

a) Why does everyone want to get into this hole of an industry?

b) I guess it could also indicate that there's still potential for someone other than Spotify to "win" it.

c) Record labels are going to wind up having to cave on the percentage they get if the services aren't even making money. At this point I don't see the streaming industry as a luxury for the record labels, they need it more than anyone, and they probably don't need to be making 60% of it.

d) Maybe more importantly, consumers are going to have to get over paying nothing for this. Somehow someone is going to have to convince millions of people that paying for music is the only way to go. It's going to be difficult when piracy is still a thing, of course.

 

[JLL]

I like how Taylor Swift refers to lyrics and music that other people wrote for her to perform as hers. They're the ones that deserve the credit, not her.

She writes her own songs.

 

[tgwaste]

Taylor Swift's crappy, predictable music was undervaluing her work but yeah... let's blame Spotify.

Swift is awesome. Shaddup.

 

[dragje]

I wonder if "connect" will be a succes, as far I understand it's basically Sound Cloud with an Apple logo?

 

[hemanwomanhater]

I like how Taylor Swift refers to lyrics and music that other people wrote for her to perform as hers. They're the ones that deserve the credit, not her.

Had you said this about almost any other mega-selling pop artist you'd have been correct but you had to choose Taylor Swift, who actually does write her own songs. http://en.wikipedia.org/wiki/1989_(Taylor_Swift_album)#Track_listing

 

[Paradoxally]

Taylor Swift's crappy, predictable music was undervaluing her work but yeah... let's blame Spotify.

Radiohead criticize Spotify too, are they crappy as well?

Give me a damn break with that logic.

 

[HobeSoundDarryl]

The criticism I think stems mostly from this:

It's because "free TV" isn't on demand. People can't watch Episode 100 of Friends for free by typing it on a search bar in a cable box. You watch whatever is on at that time on that channel, or pay to rent/download it.

Spotify, at least the PC version, isn't a broadcast mechanism. One can search a specific song and listen to it as many times as they like, with an ad interruption every 15~30 minutes. I agree, for the consumer this may be a good thing, but for the producers of the content you can sympathize with their frustration.

So 2 things: doesn't this article say that both Apple & Spotify are complying with basically the same deal? And if we want to stretch a bit, since Apple is definitely aiming for a typically great profit and Spotify doesn't profit or barely profits depending on who we ask, one might conclude that there is at least an opportunity for just as much money to flow through to the artists from each customer of either service.

2. I don't see the connection for framing Spotify as villain so that Apple can help the Artists. I'm sorry that the artists get peanuts but that's between them and their labels. If Apple cared as much about the artists as we're trying to imply or spin, how about Apple taking- say- 10% or 15% of this Music revenue as profit and sending the other 15-20% directly to the Artists who created the music? Never going to happen but that seems like a better chance for the Artists to get paid than trying to imply Spotify is robbing the artists but Apple is not.

If we consumers feel that the Artists should get paid more, why accept ANY middleman between us and them? Reach out to the artists to see if you can buy their creations direct. Or take what you pay for a song or a chunk of what you pay to rent access to a song, double it and send the extra directly to the artists as a gift.

I doubt Apple is doing any of this for the Artists and all of the profits made from this will pile atop Apple's pile of cash rather than flowing to the Artists. If we actually believe what we're spinning here, apparently Tinder pays artists better than Spotify or Apple while charging more than Spotify and Apple. Maybe we should all rally to Tinder so that the Artists can get better paid?

 

[DynaFXD]

Recording costs have plummeted. Someone who is dedicated can produce, mix and master studio quality in their bedroom with a laptop and logic X. This isn't the 90's anymore where you need million dollar equipment and sound boards

True, but I am sure anyone on this thread could pick out an amateur bedroom recording from a polished professional recording a mile away. But it is even more than that. It is not just about recording equipment and costs. It is about the expertise to put that sound together, market it, pay for the gas, electricity, food to tour to promote the unknown acts and just maybe if you are lucky, it might catch on and you can make a buck. Having someone cover all those costs so that the artist can, you know, be an artist is the point of producers and labels. That being said, those producers can also trap unwitting or over enthusiastic artists into awful deals that effectively bankrupt them (see Tom Petty in his early days, or heck, even American Idol winners today). So it is definitely not all wine and roses. But there is a balance to be had.

 

[Rogifan]

Lefsetz is a joke. He was the one who believed Taylor Swift would never make it. Look at where she is now.

That man is still bitter and living in the past because his career flopped.

Well I must say I didn't agree with him about Apple Watch. He says he's mortified by it and complains that it doesn't tell time. WTF?

 

[hemanwomanhater]

Had you said this about almost any other mega-selling pop artist you'd have been write but you had to choose Taylor Swift, who actually does write her own songs. http://en.wikipedia.org/wiki/1989_(Taylor_Swift_album)#Track_listing

2. I don't see the connection for framing Spotify as villain so that Apple can help the Artists. I'm sorry that the artists get peanuts but that's between them and their labels. If Apple cared as much about the artists as we're trying to imply or spin, how about Apple taking- say- 10% or 15% of this Music revenue as profit and sending the other 15-20% directly to the Artists who created the music? Never happen but that seems like a better chance for the Artists to get paid than trying to imply Spotify is robbing the artists but Apple is not.

Spotify kind of set the precedent for free music and it seems like no one is happy, including Spotify. Consumers have now bought into the idea that they don't need to pay because they can live with ads every 30 minutes. The fact Beats made you pay $10 was a pretty bold choice, and of course they only have something like 300 000 subscribers.

Not to say it's Spotify's fault exactly, because this industry's competitors go beyond on-demand streaming services. Pandora is free, Youtube is free, and piracy is free.

 

[Paradoxally]

Well I must say I didn't agree with him about Apple Watch. He says he's mortified by it and complains that it doesn't tell time. WTF?

Every time he spews some incessant garbage on his blog about some topic, it's always in a tone of disagreement and disgust. If we were living in his world, we'd all still be using Nokia 3310's and listening to music using tapes. I bet if you showed him a line of code he'd think that's something satanic and write 5000 words about how programming will turn us all into zombies.

 

[elmateo487]

Spotify also pays the 70% to the artists

That is not correct. They also have a free tier. That pays nearly nothing

 

[Oletros]

That is not correct. They also have a free tier. That pays nearly nothing

That is correct, Spotify pays the 70% of its revenue, being subscription or ads.

By the way, Apple has also a free music radio.

 

[HobeSoundDarryl]

Spotify kind of set the precedent for free music and it seems like no one is happy, including Spotify. Consumers have now bought into the idea that they don't need to pay because they can live with ads every 30 minutes. The fact Beats made you pay $10 was a pretty bold choice, and of course they only have something like 300 000 subscribers.

Not to say it's Spotify's fault exactly, because this industry's competitors go beyond on-demand streaming services. Pandora is free, Youtube is free, and piracy is free.

If the owners of the music didn't like what they are paid via Spotify's ad-supported tier, they could kill that deal. Nobody is forced to sell it's products to a buyer if they don't want to do so.

Apparently, the mighty Apple (probably THE most important partner of the music industry) just encouraged the labels to do exactly that and they turned Apple down. Why? Maybe what they are getting out of that Spotify deal meets their streaming revenue goals? It's not like Spotify has some kind of Apple-like leverage on the labels to make them turn down Apple AND continue to support a "no one is happy" arrangement. Apparently someone is happy enough to keep it going... even against Apple's wishes.

 

[Mackinjosh]

Still better than Spotify.

(For all the criticism Tidal got, it actually pays 72% to artists...well, it would, if people actually signed up for it).

Sure, it's better than Spotify if you choose to stick your fingers in your ears and shout really loudly so you can't actually hear that it's just as good (or just as lousy) as Spotify.

 

[elmateo487]

A current article, from just two days ago, says they're net profit is $7.7M thus far this year - which means that they're not operating at a loss:
http://uk.businessinsider.com/spoti...on-valuation-war-with-apple-music-2015-6?op=1

Am I missing something, or are you wrong?

http://m.billboard.com/entry/view/id/124629

 

[0xyMoron]

For now, it won't. In the future, maybe. The option is there, so that's better than nothing.

Why "better than nothing" ?

 

[s15119]

How can you possibly undervalue Taylor Swift ?

 

[JonneyGee]

Why is the annual amount on that chart 10 times the monthly amount instead of 12 times the monthly amount?

I was about to post the same thing. I could take this report a lot more seriously if the leaked document had 12 months in a year.

 

[AdonisSMU]

That's wild that Spotify, the largest of these kinds of services, is not even profitable. Makes me think:

a) Why does everyone want to get into this hole of an industry?

b) I guess it could also indicate that there's still potential for someone other than Spotify to "win" it.

c) Record labels are going to wind up having to cave on the percentage they get if the services aren't even making money. At this point I don't see the streaming industry as a luxury for the record labels, they need it more than anyone, and they probably don't need to be making 60% of it.

d) Maybe more importantly, consumers are going to have to get over paying nothing for this. Somehow someone is going to have to convince millions of people that paying for music is the only way to go. It's going to be difficult when piracy is still a thing, of course.

Yeah I wonder about this to some extent. Piracy is an issue think but because of all of the problems associated with it the average joe schmo doesn't care enough to pirate at this point in time and have instead opted for streaming services like Spotify and Rdio and Google Play all you can eat buffet. People who are hell bent on not paying aren't going to pay. There is nothing you can do for them. However, the price of streaming is cheap enough and useful enough that most people will pay in one form or another.

 

[thelookingglass]

That's wild that Spotify, the largest of these kinds of services, is not even profitable. Makes me think:

a) Why does everyone want to get into this hole of an industry?

b) I guess it could also indicate that there's still potential for someone other than Spotify to "win" it.

c) Record labels are going to wind up having to cave on the percentage they get if the services aren't even making money. At this point I don't see the streaming industry as a luxury for the record labels, they need it more than anyone, and they probably don't need to be making 60% of it.

d) Maybe more importantly, consumers are going to have to get over paying nothing for this. Somehow someone is going to have to convince millions of people that paying for music is the only way to go. It's going to be difficult when piracy is still a thing, of course.

Any business that can attract this many users is worth getting into. It's just a matter of figuring out the economics. Plus, in Apple's case, it's just another way of attracting people to the platform.